Vacancies set to rise, but so is unemployment

Australia is expected to record its sixth consecutive month of jobs growth in March, although the unemployment rate is also likely to increase over the same period of time, economists said.

The data is due for release on Thursday and economists are looking for the number of jobs to rise a seasonally adjusted 2,500 in March, after a 20,400 rise in February.

Despite the rise the unemployment rate is tipped to rise to 6.7 per cent from the 6.6 per cent recorded in February.

Employment growth has surprised on the upside over the previous two months and some economists are saying the growth rate suggests continuation of this bullish momentum.

Economists say the employment data tends to lag the economy by about six months and Australia tends to need economic growth of around three to four per cent annually to see an improvement in the unemployment rate. ");document.write("

advertisement

");
}
}
// -->

As a result the early strength in employment is seen as an aberration, however, economic growth in Australia over the last few quarters has suggested that the growth may not be so out of place.

"GDP has increased by more than one per cent in each of the past three quarters," National Australia Bank said in a report.

"Annualising these quarterly rates suggests growth has been running at least 4.4 per cent over this period."

This was supported by SG Australia chief economist Glenn Maguire.

"The strength in employment growth in the past two months has underpinned a relatively firm turnaround in the unemployment rate, which has now clearly peaked for this cycle," he said.

"Over the month of March, we look for a further modest gain in employment."

The peak in the cycle was a view supported by the Reserve Bank of Australia (RBA).

"Although I am always wary of counting chickens before they hatch, it now appears that over the past six months the unemployment rate may have peaked at, or a little above, seven per cent," RBA Governor Ian Macfarlane said in a speech last week.

He added that if this was indeed the outcome it would be the first time for 30 years the peak in the unemployment rate was lower than in the previous cycle.

Still, there are some economists who are tipping March will bring an end to the jobs growth streak.

"We look for a statistical pullback in March employment, with a forecast of (a fall of) 20,000," HSBC senior economist Anthony Thompson said.

Mr Thompson said after strong growth in the first two months of the year, which has seen a net 71,400 jobs added, a correction is expected in March with both full time and part time jobs seen falling.

Still, given the recent run of employment growth, another surprise can not be ruled out.

"We see upside risks for total employment relative to our to our forecast, given the tendency for upside employment surprises of late," Mr Thompson said.

"Given we see upside risks for employment, we see downside risks for our unemployment rate."